KWEB: China’s Internet Sector - AI Catch-Up and Cheap ValuationsChina’s internet and tech stocks have been hammered for years — regulatory crackdowns, slowing growth fears, and geopolitical tension have crushed sentiment. But as investors know, the best opportunities often hide in what everyone hates.
Enter KWEB, the KraneShares CSI China Internet ETF.
It’s a diversified, liquid way to play a bounce in major names like Alibaba, Tencent, JD .com, Baidu, Meituan and PDD.
Here’s why I think the risk/reward looks compelling now — especially if you believe in AI closing the gap.
Key Bullish Points:
1) Valuations at Rock-Bottom
Many big China internet stocks are still trading at single-digit P/E ratios, even as their cash flows recover. Compared to U.S. big tech trading at 30–50x, this is a huge valuation gap.
Regulatory fears seem largely priced in — Beijing wants growth, not stagnation, and some policies are easing.
2) China’s AI Push — Just “Months Behind”
Jansen Whang recently argued that China’s generative AI development is only “months behind” the U.S. Players like Baidu, Alibaba Cloud, Tencent, and SenseTime are all racing to launch new LLMs and integrated AI tools.
If you believe the gap closes, Chinese platforms could see a major earnings rebound as they roll out AI upgrades across search, cloud, e-commerce and social media.
3) Sentiment So Bad, It’s Good
When the headlines scream “China is uninvestable,” that’s often when big mean reversion trades set up. Even a small policy pivot, stimulus plan, or positive AI news cycle can spark a sharp rally.
KWEB is one of the cleanest ways to express this view because it holds a diversified basket — you don’t have to pick a single winner.
